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BirdEye · 07-03-2009, 12:11 AM

I will try my best to explain this.

In 1918 via the Federal Reserve act the US gov. delegated congressional duty of the coining and printing of currency to the Federal Reserve. Before this act all bills said US Note and after the act they say Federal Reserve Note.

The Federal Reserve then and today is in control of our currency. They create the currency and manage the economy in which is supports and works. The Fed (Federal Reserve) then makes the foundational money supply and loans it to the US govt at interest. The interest is about $40Mil per hour on the money supply of 2003, which is the last date it was released. While the US does pay interest it pays interest with the very currency that it is borrowing so to sidestep that, the US govt has put up its citizens and the taxes they pay for collateral for these loans.

Now when something like the stimulus is needed, the Fed gov. obviously does not have the money. So the Treasury auctions TBills or Treasury bills which are bought in public auctions. Everybody is able to buy these TBills and again the collateral for the US gov. is the American People. Since anybody is able to buy these bills, sometimes it is a foreign country and sometimes it is the federal reserve itself. When it is the federal reserve, they the Fed simply print the money and buy the bill. The newly printed money is then added into the money supply and the US Govt pays interest on it (the 40Mil goes up).

So to make it short the govt needs the money and puts up a guarantee for the money. The fed reacts by printing the money and then buying the guarantee. The govt then owes the fed that money borrowed as well as the interest determined.

If the Fed govt needed $100 and this put up for auction a treasury for such a garentee. The Fed buys it, and they pay for it with newly printed money. The new money is one new crisp $100 bill, which costed the Fed $.2 cents to create. The US govt now owes the fed the principle plus the guarantee incentive, as well as the interest.

The fed which is a private and not a part of the US govt just made for itself a guaranteed $99.98 with guarenteed expected interest.

I hope that explains it well.

07-03-2009, 12:11 AM	#2
BirdEye Junior Member Join Date: Jun 2009 Posts: 32	I will try my best to explain this. In 1918 via the Federal Reserve act the US gov. delegated congressional duty of the coining and printing of currency to the Federal Reserve. Before this act all bills said US Note and after the act they say Federal Reserve Note. The Federal Reserve then and today is in control of our currency. They create the currency and manage the economy in which is supports and works. The Fed (Federal Reserve) then makes the foundational money supply and loans it to the US govt at interest. The interest is about $40Mil per hour on the money supply of 2003, which is the last date it was released. While the US does pay interest it pays interest with the very currency that it is borrowing so to sidestep that, the US govt has put up its citizens and the taxes they pay for collateral for these loans. Now when something like the stimulus is needed, the Fed gov. obviously does not have the money. So the Treasury auctions TBills or Treasury bills which are bought in public auctions. Everybody is able to buy these TBills and again the collateral for the US gov. is the American People. Since anybody is able to buy these bills, sometimes it is a foreign country and sometimes it is the federal reserve itself. When it is the federal reserve, they the Fed simply print the money and buy the bill. The newly printed money is then added into the money supply and the US Govt pays interest on it (the 40Mil goes up). So to make it short the govt needs the money and puts up a guarantee for the money. The fed reacts by printing the money and then buying the guarantee. The govt then owes the fed that money borrowed as well as the interest determined. If the Fed govt needed $100 and this put up for auction a treasury for such a garentee. The Fed buys it, and they pay for it with newly printed money. The new money is one new crisp $100 bill, which costed the Fed $.2 cents to create. The US govt now owes the fed the principle plus the guarantee incentive, as well as the interest. The fed which is a private and not a part of the US govt just made for itself a guaranteed $99.98 with guarenteed expected interest. I hope that explains it well.
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